After fuelling Canada’s economy through the COVID-19 pandemic, the real estate market is showing signs of weakness as home prices fall and bidding wars dissipate.

It’s welcome news for prospective buyers hoping for a better price. But as the busy fall season nears, realtors and economists are at odds over how long the pricing slide will last and how low it will go.

“The fall is going to be interesting because we’re going to see probably more buyers jumping into the market and you don’t need a ton more buyers to provide a little bit more stability to prices,” said John Pasalis, president of Realosophy Realty Inc. in Toronto.

“Just a little bit of a bump in demand could be the difference between homes selling in three, four weeks versus selling in two weeks or selling a lot faster.”

The average home price is still above pre-pandemic levels, but increasing mortgage rates and inflationary pressures are weighing on the market.

When pandemic lockdowns began in March 2020, the Toronto Regional Real Estate Board said the average home price in the area — one of Canada’s hottest — sat at $902,680. Last month, it was $1,074,754, a one per cent hike from July 2021, but a six per cent drop from June 2022.

The latest data from the Canadian Real Estate Association (CREA) showed prices hit $629,971 in July, down five per cent from $662,924 last July. On a seasonally adjusted basis, it amounted to $650,760, a three per cent drop from June. When pandemic lockdowns began in March 2020, the average national price was $543,920.

The association forecast the national average home price will rise by 10.8 per cent on an annual basis to $762,386 by the end of 2022 and hit $786,252 in 2023.

But some economists are anticipating an even greater price reduction.

In June, a trio of Desjardins economists said they expected the average national home price to fall by 15 per cent between its February high — $817,253 — and the end of 2023, but because “we’re almost there,” they adjusted their forecast in August to predict a drop between 20 and 25 per cent.

“Home prices continue to fall and have further to go before they find a bottom,” said Randall Bartlett, Hélène Bégin and Marc Desormeaux, in a report released July 11.

“That said, we still believe home prices will end 2023 above pre-pandemic levels nationally and in all 10 provinces.”

In anticipation of a drop in prices, agents have noticed prospective buyers sitting on the sidelines of the market in recent months, while sellers come to terms with the fact that their homes won’t fetch as much money as they would have at the start of the year.

Lori Fralic calls it a “stalemate.”

“We are seeing lowball offers,” said the Vancouver agent with Keller Williams Realty VanCentral.

“There’s lots of bargain hunters out there who are throwing out offers but if they don’t have to sell, a lot of sellers are saying, ‘no, sorry, not taking it.”

It’s a change from the torrid pace of sales and frenzied bidding wars seen earlier in the year and late last year.

Much of the shift is attributable to mortgage rates, which mirror fluctuations in interests rates and can eat into buying power.

The Bank of Canada increased its key interest rate by one percentage point to 2.5 per cent in July in the largest hike the country has seen in 24 years.

Economists foresee the increases continuing and Fralic said they’re already encouraging people who don’t need to buy immediately to hold off.

She’s seen a drop in prices in B.C., but said it’s not as much of a decrease as many expected.

“If people are thinking (prices) are going to plummet, I don’t think that’s accurate,” she said.

“If you look at the 10-year average of Metro Vancouver, housing prices are way up and if they do dip, they might dip slightly and come back up. There’s always been sort of a steady incline with dips along the way.”

The Real Estate Board of Greater Vancouver said the composite benchmark price for the region — often Canada’s hottest — sat at more than $1.2 million in July, a roughly 10 per cent increase from July 2021 and a two per cent drop from June 2022.

“It’s anyone’s guess how much prices will fall,” Sherry Cooper, chief economist at Dominion Lending Centres, said.

Markets, she said, tend to be very localized and the surges or drops some see may not be mimicked in others.

For example, she said Alberta has not seen the slowdown many other Canadian markets have because its energy sector is much stronger than it was in the past.

But Cooper noted home sales activity have declined very sharply in the Greater Toronto Area, the Greater Golden Horseshoe Area and in parts of British Columbia around Vancouver.

“It’s the markets that experienced the 50 per cent increase in home prices that have seen the biggest correction, and that’s what you’d expect because those are the most expensive homes in Canada with the largest outstanding mortgages.”

(This article is courtesy of BNNBloomberg)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

You have likely heard – or will soon be hearing – a lot of talk about “trigger rates” and “trigger points”. More importantly, we are here to guide you as you will hear these terms along with more changes in the Bank of Canada rate.

Let’s start with a few definitions:

• Variable Rate Mortgage (VRM) – prime changes, rate changes. When interest rates change, typically, your mortgage payment will stay the same.
• Adjustable Rate Mortgage (ARM) – prime changes, rate changes. Unlike variable rates, your mortgage payment will change when interest rates change.
• Trigger Rate – When interest rates increase to the point that regular principal and interest payments no longer cover the interest charged, interest is deferred, and the principal balance (total cost) can increase until it hits the trigger point.
• Trigger Point – When the outstanding principal amount (including any deferred interest) exceeds the original principal amount. The lender will notify the customer and inform them of how much the principal amount exceeds the excess amount (Trigger Point). The client then typically has 30 days to make a lump sum payment; increase the amount of the principal and interest payment; or convert to a fixed rate term.

NOW, WHICH MORTGAGES WILL BE AFFECTED FIRST?

Quick answer, VRMs from March 2020 to March 2022.

During the month of March 2020, the prime rate dropped three times in quick succession from 3.95% to 2.45%, and variable-rate mortgages arranged while prime was 2.45% have the lowest payments. The lower the interest rate was, the lower the trigger rate, and the faster your client may hit this negative amortization.

WHAT TO DO

When this happens, customers are contacted by the lender and generally have three ways they can proceed:

• Make a lump-sum payment against the loan amount
• Convert with a new loan at a fixed-rate term
• Increase their monthly payment amount to pay off their outstanding principal balance within their remaining original amortization period

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

The Bank of Canada has raised interest rates by 2.25 per cent since March. While many homeowners expected rates to rise, no one expected things to go up so quickly.

These increases have a major impact on variable-rate mortgage holders since their lender’s prime rate will often increase in step with the central bank’s rate. That means variable-rate mortgage holders with a fixed payment will see the interest portion of their payments increase. For those on a fixed-rate mortgage, nothing changes since you would have locked in your interest rate when you signed your mortgage.

With more interest rate increases expected by the end of the year, many homeowners will likely hit their trigger rate unless they adjust their monthly payments.

What is a trigger rate?

A trigger rate is the interest rate level where your lender can adjust your payment amount, even though it’s normally fixed. The trigger rate applies to variable-rate mortgage holders that are on a fixed payment schedule.

Variable rate mortgages have trigger rates to ensure home owners are always building equity with their payments, especially as interest rates rise.

With a variable-rate mortgage, the amount you pay is usually fixed. What changes is the amount of your payment going to interest. This interest rate will be affected by the central bank’s.

Sometimes lenders lump variable-rate mortgages together with adjustable rate mortgages, which are different. With an adjustable rate mortgage the payments themselves increase or decrease due to shifting interest payments. With an adjustable rate mortgage — like a fixed-rate mortgage — there is no need to worry about a trigger rate.

Every lender has a different formula for calculating the trigger rate. Generally speaking, the trigger rate is when your interest payments exceed your total payments.

Let’s say you buy a home for $625,000 and have a down payment of 20 per cent ($125,000). Your mortgage would be $500,000.

You now have a fixed payment variable-rate mortgage in January for 1.5 per cent. You selected a five-year term with a 25-year amortization schedule. Your total payment for the five-year term would be $119,915.14, with $34,275.05 going to interest. Your monthly payment is $1,998.59.

The most important numbers in these scenarios are the total amount from scenario one ($119,915.14) and the interest from scenario two ($123,032.28).

If this were to happen, your monthly payment wouldn’t even cover the interest owed. In theory, your interest would be deferred. Even though you would be paying your mortgage, your balance would actually increase since the interest you’re not paying is being added to the balance.

That’s why there’s a trigger rate in place for variable-rate mortgages. It’s to ensure homeowners are always building equity.

How your trigger rate is calculated?

Every homeowner with a variable-rate mortgage will have a different trigger rate since it’s based on your mortgage amount, monthly payment and interest rate.

The quickest way to determine your trigger rate is to review your mortgage documents. This would be the initial contract you signed. Your trigger rate will be clearly displayed, so you’ll know when to expect a call from your bank. That said, the trigger rate outlined in your documents assumes you haven’t made any prepayments. Every time you make a prepayment, it gets applied directly to your principal, so your trigger rate would increase.

For a more accurate number, you could contact your mortgage lender. They’ll be able to calculate your current trigger rate, so you’ll know how much breathing room you have.

Another way to calculate your trigger rate is to use the following formula:

(Payment amount X # of Payments per year / Balance owing) X 100 = Trigger rate in per cent.

If you have an outstanding mortgage balance of $500,000 with bi-weekly payments (26 payments per year) of $1,100. Your formula would look like this:

($1,100 X 26 / $500,000) X 100 = 5.72 per cent

In this scenario, your trigger rate would be about 5.72 per cent. Remember, every lender uses a slightly different formula to calculate your trigger rate, so you’ll want to contact them if you want an exact number. However, this formula is a reliable way to estimate yours quickly.

What happens when you hit your trigger rate?

When you reach your trigger rate, your lender will contact you with a few different options, so you don’t have negative equity with your payments. Generally, you’ll have the following choices available:

• Adjust your payment – Your payment will need to be changed, so at least some of it is going toward your principal. For example, if you were on a 20-year amortization schedule when you hit your trigger rate, your financial institution may advise switching to a 25-year amortization. This is a good option for those who already have equity in their home. If you’re already at the maximum amortization allowed, the lender would need to increase your monthly payment.
• Make a prepayment – The trigger is dependent on the remaining balance of your mortgage. If you make a lump sum payment, that would push your trigger rate higher. Alternatively, you could increase your monthly payments, so more money is going toward your principal. That said, your mortgage likely has specific rules about how many additional payments you can make.
• Switch to a fixed-rate mortgage – Your lender may allow you to switch to a fixed-rate mortgage without penalties. By doing this, you’ll lock in at current rates. While this strategy may give you peace of mind, it could cost you more in the long run. Plus, your monthly payments would increase.
• Pay off your mortgage – One final option you have to avoid your trigger rate is to pay off your mortgage balance. Of course, if you’re worried about your trigger rate, the odds are you don’t have enough cash lying around to discharge your mortgage.

Try not to stress out

If you’re concerned about your trigger rate, talk to your lender now about your options. Alternatively, you may need to make some lifestyle changes. Cutting expenses or putting off major expenses could help your cash flow.

Those with small mortgages won’t be as impacted by increasing interest rates since they have equity built up in their homes. It’s new homeowners who have stretched themselves out to get into the market that will feel the pressure.

You can read the full article on MoneyWise

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Who makes more money on Real Estate than developers?

We have all heard how developers are greedy, but ever wonder who makes the most money on a real estate development?  Local, provincial and federal governments, that’s who!

According to CMHC, fees and charges account for 20% of the price of a new condo apartment.  Want proof?  Check out CMHC confirms government costs raise new home prices – Western Investor

The report further states that a typical developer’s profit on a new condo project is estimated at between 10% and 15%.

It seems to me that if the various governments want to really improve affordability they could take a lower cut.  The federal government could raise the GST thresholds, or eliminate them for first-time buyers.  The provincial government could raise the threshold for first-time buyers to $750,000, matching the threshold for PTT exemption on new construction, and local governments could give property tax relief for first-time buyers.

Just saying!

Enjoy the rest of summer, thanks as always for the support.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Most Canadians dream of owning a beautiful home where they can raise their family and watch them grow. As our families get wonderful little additions or grow into a bigger space, many of us want to learn how to move up the property ladder.

With the cost of everything rising and additional costs we accumulate as our families grow, Canadians may become unaware of how debt outside of their mortgage is holding them back. In fact, 6/10 Canadians are living paycheck to paycheck due to debt.

For example, it’s common to have a car loan payment for $500 a month, a credit card bill that’s maybe $200 a month, and a line of credit that stays at around $300 a month. That’s $1,000.00 in payments outside of a mortgage.

DID YOU KNOW, that can take AWAY 200K in mortgage qualifications? 

That’s the difference between buying a home for 600k or 800K! A HUGE deal when considering your financial future and planning to grow your wealth.

Let’s say you didn’t have kids and wanted to consider retiring early or buying a vacation property. Consolidating debt opens that qualification and cashflow room allowing you to design yourself an empowering financial future.

Debt consolidation allows you to free up your monthly cash flow to re-invest in your family’s future. 

This is not something generally forthcoming if you deal with any lender on your own, as higher interest products are the largest profit-making item for all institutions. 

Yet, the goal of homeownership is to be able to live the life we’ve always dreamed of with financial security!

If your debt is growing and you foresee a large purchase, we recommend being proactive. Refinancing with the lowest available interest rate including any penalties or costs will give you the chance to provide for your family’s needs.

If you’re ready to live the life you’ve always dreamed about and stop stressing about monthly payments, get in touch with us so our team can evaluate your financial situation and provide you with unbiased advice! 

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Macklem’s Op-Ed (emphasis is mine)

Inflation in Canada has come down a little, but it remains far too high. After rising rapidly to reach 8.1 per cent in June, inflation as measured by the consumer price index (CPI) was 7.6 per cent in July.

The good news is that it looks like inflation may have peaked. The price of gasoline, which has contributed about one-fifth of overall inflation in recent months, declined from an average of $2.07 a litre in June to $1.88 a litre in July. And we know gas prices at the pump have fallen further so far in August. Prices of some key agricultural commodities, like wheat, have also eased, and global shipping costs have fallen from exceptionally high levels. If these trends persist, inflation will continue to ease.

The bad news is that inflation will likely remain too high for some time. Many of the global factors that have pushed up inflation won’t go away quickly enough — supply chain disruptions continue, geopolitical tensions are high, and commodity prices remain volatile. And here at home, our economy has been running too hot. As Canadians finally enjoy a fully reopened economy, they want to buy more goods and services than our economy can produce. Businesses are having trouble keeping up with demand, and that’s leading to delays and higher prices. The result is broad-based inflation. Even if inflation came down a little in July, prices for more than half of the goods and services that make up the CPI basket are rising faster than five per cent.

As the central bank, it’s our job to control inflation and that means we need to cool things down. That’s why we have been raising interest rates since March. In July, we took the unusual step of raising the policy interest rate by a full percentage point, to 2.5 per cent. Increasing our policy rate raises borrowing costs across the economy — for things like personal loans, car loans, and mortgages. And when we increase the cost of borrowing, consumers tend to borrow and spend less and save more. We need to slow down spending to allow supply time to catch up with demand and take the steam out of inflation.

One area of the economy where it is easy to see how this works is the housing market. With higher mortgage costs, housing activity has slowed quickly after unsustainable growth during the pandemic, and housing prices are moderating. As housing slows, peoples’ spending on housing-related goods and services, such as renovations and appliances and furniture, should also slow.

To tame inflation, we need to bring overall demand in the economy into better balance with supply. Our goal is to cool the economy enough to get inflation back to the two per cent target. We don’t want to choke off demand — we want to slow its growth. That’s what we call a soft landing. By acting forcefully in raising interest rates now, we are trying to avoid the need for even higher interest rates and a sharper slowing down the road.

I know some Canadians are asking, “Why are you raising the cost of borrowing when the cost of everything is already too high?”

We recognize that for many Canadians higher interest rates will add to the difficulties they are already facing with high inflation. But it’s by raising borrowing costs in the short term that we will bring inflation down for the long term. This will ultimately be better for everyone because high inflation hurts us all. It eats away at our purchasing power and makes it difficult to plan our spending and saving decisions. It feels unfair and that erodes confidence in our economy.

The best way to protect people from high inflation is to eliminate it. That’s our job, and we are determined to do it. Tuesday’s inflation number offers a bit of relief, but unfortunately, it will take some time before inflation is back to normal. We know our job is not done yet — it won’t be done until inflation gets back to the two per cent target.

Tiff Macklem is governor of the Bank of Canada

Bottom Line

I published Macklem’s statement in its entirety to do it justice. You can decide whether you think the overnight rate will go up by 50 vs 75 bps on September 7th, but undoubtedly it will go up. It is also clear that the Bank will not cut the policy rate until inflation is at the 2% target. So don’t assume that variable mortgage rates will decline quickly in response to a slowdown in the economy. The Bank’s emphasis on the housing slowdown being an essential precursor to the reduction in overall economic activity portends an extended period of credit stringency.

This is a sea change in the economy. This is the end of a forty-year bull market in bonds triggered by the disinflationary forces of globalization, cheap emerging market labour and rapid technological advance. It is also the end of very cheap credit. Household balance sheets will feel the pinch. Recent home borrowers who benefited from the record-low mortgage rates for the two years beginning in March 2020 will increasingly feel the constraint of higher borrowing costs on their discretionary spending. Ultimately, this will return inflation to its 2% target, but it will take a while.

(This article is courtesy of the Sherry Cooper Assoc.)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Gasoline Prices Dipped, But No Time To Celebrate

While we are all grateful that gasoline prices declined from record highs in July, today’s release of the July inflation data shows that the underlying inflation momentum remains too strong for comfort. Governor Macklem will likely continue to hike the policy rate aggressively when they next announce their decision on September 7th. Judging from the swaps market, traders are betting evenly on a 50 bps vs. 75 bps increase next month. 

The Consumer Price Index (CPI) rose 7.6% in July from a year earlier, compared to 8.1% in June. The dip reflected the largest drop in gasoline prices since the pandemic’s beginning.

On a monthly basis, however, inflation increased 0.1% from the June reading, the seventh consecutive rise. Excluding gasoline, prices rose 6.6% y/y last month, following a 6.5% increase in June, as upward pressure on prices remained broadly based. 

Consumers paid 9.2% less for gasoline in July compared with the previous month, the largest monthly decline since April 2020. Ongoing concerns related to a slowing global economy, as well as increased COVID-19 pandemic public health restrictions in China and slowing demand for gasoline in the United States, led to lower worldwide demand for crude oil, putting downward pressure on prices at the pump.

On a monthly basis, gasoline prices fell the most in Ontario (-12.2%), where the provincial government temporarily lowered the gasoline tax.

Prices for food purchased from stores increased more on a year-over-year basis in July (+9.9%) than in June (+9.4%). Prices for bakery products (+13.6%) continued to rise faster as wheat prices remained elevated. Higher input costs and global supply uncertainty related to the Russian invasion of Ukraine continued to put upward pressure on global wheat prices amid an already constrained supply.

Other food items also exhibited faster price growth, including non-alcoholic beverages (+9.5%), sugar and confectionery (+9.7%), preserved fruit and fruit preparations (+10.4%), eggs (+15.8%), fresh fruit (+11.7%), and coffee and tea (+13.8%).

On a year-over-year basis, the mortgage interest cost index (+1.7%) increased for the first time since September 2020 amid elevated bond yields and a higher interest rate environment.

Year over year, growth in other owned accommodation expenses (+9.7%) and homeowners’ replacement cost (+9.1%) slowed, reflecting current trends in many regional housing markets across Canada.

In the context of higher mortgage rates, which could lead to additional rental demand, rent increased 4.9% in July compared with the same month in 2021, following a 4.3% increase in June. Faster price growth in the rent index was largely driven by an acceleration in Ontario (+6.4%) and Alberta (+3.4%).

Bottom Line

With some luck, price pressures might be peaking. The chart above shows the Bank of Canada’s most recent forecast for inflation. The Bank of Canada estimated inflation would average about 8% through the third quarter of 2022 before slowing. Now, the estimate could be revised a bit lower this time. That is why roughly half of the market participants expect a 50-bps rate hike next month, revised down from the 75-bps figure widely expected a month ago. Either way, the prime rate is rising more rapidly than the five-year government of Canada bond yield, making fixed mortgage rates relatively more attractive than variable rates tied to prime. Regardless of which path the Bank takes at the next meeting, the Bank will stay the course for some time. 

Central banks cannot return to easy money quickly without risking another burst of inflation. Even with the Canadian economy slowing sharply in the second half of this year, labour markets remain very tight, and the central Bank is behind the curve. With hindsight, we know they kept rates too low for too long, triggering excess demand, particularly in the red-hot housing sector. Watching that unwind, especially in the country’s most expensive and frothy housing markets, will be the Bank’s most prudent option.

(This article is courtesy of the Sherry Cooper Assoc.)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Housing Slowdown Continues in July

Statistics released today by the Canadian Real Estate Association (CREA) show that the slowdown that began in March in response to higher interest rates continued in July, albeit at a slower pace. Home sales recorded over Canadian MLS® Systems fell by 5.3% between June and July 2022. The pace of home sales last month was well below its 10-year moving average as buyers and sellers moved to the sidelines in response to rising mortgage rates and a reassessment of the outlook. While this was the fifth consecutive month-over-month decline in housing activity, it was also the smallest of the five.

Sales were down in about three-quarters of all local markets, led by the Greater Toronto Area (GTA), Greater Vancouver, Fraser Valley, Calgary and Edmonton.

The actual (not seasonally adjusted) number of transactions in July 2022 came in 29.3% below that same month last year.

Housing market analysts at the Canadian banks continued to revise their home price forecasts over the next year. Royal Bank, TD, Desjardin and BMO all project that Canadian benchmark prices will fall roughly 20%-to-25% from their February peak by the end of 2023. Of course, this will vary from region to region. The hardest hit has been the geographies where prices surged the most, especially in the Greater Golden Horseshoe in Ontario and, to a lesser extent, in BC.

However, even if these forecasts prove to be correct, home prices in most regions will remain well above the levels posted before the pandemic began in early 2020. Housing in Canada’s largest cities will remain unaffordable for median-income households.

New Listings

The number of newly listed homes fell back by 5.3% month-over-month in July. The decline in new supply was broad-based, with listings decreasing in about three-quarters of local markets, including most significant markets.

With sales and new listings down by 5.3% in July, the sales-to-new listings ratio remained unchanged at 51.7% – slightly below the long-term average for the national sales-to-new listings ratio of 55.1%.

There were 3.4 months of inventory on a national basis at the end of July 2022, still historically low but up quite a bit from the all-time low of 1.7 months set at the beginning of 2022.

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) edged down 1.7% month-over-month in July 2022. This was similar but less than the 1.9% decline in June.

Regionally, most of the monthly declines in recent months have been in markets across Ontario and, to a lesser extent, in British Columbia.

Prices continue to be more or less flat across the Prairies while only now showing minor signs of dipping in Quebec. On the East Coast, prices continue to rise at a much slower pace. The exception is relatively more expensive Halifax-Dartmouth, where prices have dipped slightly.

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 10.9% on a year-over-year basis in July. However, those year-over-year comparisons have been winding down quickly from the near-30% record year-over-year increases logged in January and February.

Bottom Line

The Bank of Canada raised the overnight policy rate by a percentage point on July 13, so the full effect of this jumbo hike will likely spill into the August data. Inflation fell a bit more than expected last month in the US. We expect to see a decline in Canadian CPI inflation in July, as well, when it is published tomorrow morning. Nevertheless, central banks will continue to tighten monetary policy further. CREA today said they expect an additional 100 bp hike in the remainder of this year, which would take the policy rate up to 3.5% by yearend. That would imply a prime rate of 5.7%.

In contrast, the five-year government of Canada bond yield is hovering just under 2.8%, reflective of the economic slowdown in Canada in the second half of this year. This could make fixed mortgage rates more attractive to future borrowers. Should the prime rate hit those levels, many fixed-payment variable rate borrowers that first booked their mortgages when prime touched 2.45%–it’s low posted since mid-March 2020– might be hearing from their lenders regarding potential trigger points. Will this temper Bank of Canada rate hikes?

Probably not. The Governing Council makes its next decision on September 7. Another 50-to-75 bps is baked in at this point.

(This article is courtesy of the Sherry Cooper Assoc.)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Do you know anyone with a disability? Did you know that if they qualify for the Disability Tax Credit There may also be a significant tax refund that can help them financially?

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

We recently did a segment with Global News BC to help educate Canadians on Reverse Mortgages as an option.

This could be a great wealth-building tool for those over the age of 55 who are:

1. Looking to purchase additional property without selling their home
2. Wanting the freedom of no mortgage payments
3. Desire a home renovation without accumulating payments or pulling out investments
4. Looking to consolidate outside and/or high-interest credit card debt
5. Gift inheritance with a warm hand
6. Worried about having enough investment income to properly fund retirement
7. Protecting their government benefits and using their capital tax-free
8. Or want to go through a divorce without selling their home or having payments

The Reverse Mortgage goes up to approx. 50% of your property’s value and there is no stress test to qualify. If you know someone over 55 that would like to review their options watch this segment and share it with someone you care about who may be struggling during these challenging times or who wants to make sure they’re protecting their investments.

Click here to watch the Global News segment on Reverse Mortgages.

Here’s a link to an article I wrote on Reverse Mortgages.

The Reverse Mortgage isn’t for everyone, but whatever stage of life you’re in we have a mortgage for you. It’s all part of your journey and we’re always here to help.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog.